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    Corporation Tax on Limited Company

    Just wondering how you work out Corporation Tax, i see that it is 20% on taxable profits, but not sure how this works

    e.g.

    Turn over = £100,000
    Profit = £50,000

    What would the corporation tax and income tax be on this?

    9 Comments

    [FONT=Verdana]I would suggest you link into a good accountant to look into this for, as the last thing you want is an inspection from HMRC as it can be quite painful.

    HM Revenue & Customs: Corporation Tax
    hmrc.gov.uk/ct/…htm

    Introduction to Corporation Tax | Business Link
    businesslink.gov.uk/bdo…697

    Corporation and Income tax UK - Companies Limited
    companies-limited.co.uk/com…asp

    Cheers, Scotty Boy! :thumbsup:
    [/FONT]

    Very quickly, my understanding is that 20% corp tax is paid on the entire £50k profit & there is no income tax on that.
    However, if u pay yrself a salary from that profit eg. £25k then u pay that to yrself first, making yr final profits only £25k on which u then pay corp tax.
    The £25k u paid yrself is then subject to income tax (& national insurance), which as u know is banded (or tiered). So on the first £6k of yr salary the tax is nil, then the next £19k is at 20%. If u pay yrself more then the next tax rate is 32.5% (can't remember the threshold amt), then finally any more than that is taxed at 40%.

    Hope the abv helps.

    Ps. I'm not an accountant, but just run a Ltd. Co.

    Original Poster

    sajsaleem;7333815

    Very quickly, my understanding is that 20% corp tax is paid on the entire … Very quickly, my understanding is that 20% corp tax is paid on the entire £50k profit & there is no income tax on that. However, if u pay yrself a salary from that profit eg. £25k then u pay that to yrself first, making yr final profits only £25k on which u then pay corp tax. The £25k u paid yrself is then subject to income tax (& national insurance), which as u know is banded (or tiered). So on the first £6k of yr salary the tax is nil, then the next £19k is at 20%. If u pay yrself more then the next tax rate is 32.5% (can't remember the threshold amt), then finally any more than that is taxed at 40%. Hope the abv helps.Ps. I'm not an accountant, but just run a Ltd. Co.



    Very clear Thanks!! rep left

    If you're an employee of your own ltd company you should be paying yourself minimum wage (to maximise your take home money).

    ficosaneil;7333868

    If you're an employee of your own ltd company you should be paying … If you're an employee of your own ltd company you should be paying yourself minimum wage (to maximise your take home money).



    Any more tips

    planning to start my own co. in the new year!

    Cheers for the info. on corp tax. So the profit left after tax taken out remains the property of the business and is reinvested?

    ...that is correct! I 'pay' myself £380 per month which comes to £4,560 on which I pay no tax.
    U can then 'pay' yrself in other ways or take dividends (but I'm sure yr accountant with help u with that & be 'creative' in his accounting)

    Remember: Tax AVOIDANCE is good - Tax EVASION is bad

    Pay a little tax & keep the tax man off yr back - pay none & he'll be all over u like a bad rash!

    Hi there

    Im currently qualifying as an accountant the small companies tax rate is 21% on profits under £300k.

    Jointy;7333989

    Hi thereIm currently qualifying as an accountant the small companies tax … Hi thereIm currently qualifying as an accountant the small companies tax rate is 21% on profits under £300k.



    Hes right brea!
    ]http//ww…htm

    5nowman;7333908

    Any more tips :)planning to start my own co. in the new year!Cheers for … Any more tips :)planning to start my own co. in the new year!Cheers for the info. on corp tax. So the profit left after tax taken out remains the property of the business and is reinvested?



    If you're VAT registered ALWAYS pay your bill on time and in full as the vat man has very strong power to get his money one way or another.
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